Telecommunications company AT&T jumped onto the list of the top 20 stocks owned by institutional investors in 3Q (at No. 15), prior to the October announcement that the company would acquire Time Warner, according to the just-released eVestment 3Q 2016 Institutional Stock Ownership Report. This jump might indicate that some stock pickers saw big things coming for the company. AT&T may also have benefitted from the increasing ownership of technology stocks across several universes, as highlighted in the report. AT&T rose 9 spots from 2Q to jump into the top 20 and 13 spots from 3Q a year ago.
eVestment’s report looks at trends in stock ownership among institutional investors based on data reported to eVestment by asset managers who are buying, selling and holding stock on those investors’ behalf and is one of the most comprehensive looks at institutional investor stock ownership trends. And since institutional investors like pension funds, insurance companies, foundations and endowments tend to lead retail investors in their stock buying and selling by six to nine months and control about half the investable assets in the world, the report provides retail investors a unique look into equities strategies among the world’s largest investors.
Technology companies Microsoft, Alphabet and Apple, in that order, led the rankings of the top three stocks held by institutional investors. While still a very popular stock among institutional investors, Apple has fallen from the No. 1 spot in 3Q 2015 to No. 3 in 3Q 2016.
In addition to ranking the top 20 stocks institutional investors are holding overall, the report highlights ownership and allocation trends among several U.S. and international large-, mid- and small cap equity strategies.
Some interesting points from the report include:
- Ownership of technology stocks increased across all universes noted in the report quarter over quarter, except the All UK Equities universe. The drop in ownership of tech stocks among the All U.K. Equities universe between 3Q and 2Q was very small (-0.06%) indicating a shift driven more by market activity than major ownership reallocations, but it’s a trend worth watching.
- Exxon Mobile jumped from the 19th most widely held stock in 2Q 2016 to the 14th most widely held stock in 3Q 2016, an interesting move given that U.S. energy stocks in most of the universes the report tracks only saw minimal increases in ownership.
- Ownership of utility stocks was down almost across the board, with only utilities ownership in the All Japan Equity universe showing a tiny increase: up +0.03% quarter over quarter. Drops in utilities ownership in several universes, including Mid Cap Value Equity and U.S. Small Cap Value Equity were pronounced.
- Among most of the U.S. equities universes, institutional ownership of consumer discretionary stocks in 3Q was down. In the U.S. Mid Cap Growth Equity and U.S. Small Cap Growth Equity universes, for instance, ownership was down more than 1% quarter-over-quarter. And many of the universes also showed year-over-year declines. After an economic recovery that could be characterized as tepid, stock pickers may be steering clients away from consumer discretionary stocks if they fear another recension that might negatively impact these stocks’ value.
- Among regional and country allocations, Chinese stocks saw the largest increase in ownership, up 1.42% from 2Q to 3Q.
- The largest decrease in ownership regional appeared in Mexican stocks, dropping -0.77% quarter-over-quarter and marking a -1.13% drop year over year. Mexico and U.S.-Mexico relations have been in the news a lot in the past year and stock pickers may be factoring in changes to that relationship and impacts on Mexican stocks into their decisions.
The report uses eVestment’s Holdings Analysis solution to review stocks bought, sold or held by asset managers working for institutional investors like pension funds, foundations, endowments, insurance companies and sovereign wealth funds. The ownership trends and weights are the result of overall market movements and increasing or decreasing investor and asset manager interest in particular stocks, sectors or universes and over time offer a unique look at stocks and universes growing in or falling out of favor with institutional investors.
To download a full copy of the report, please click here.